Jackson Hole, US recession, DNC

Investing.com — Wall Street’s major indexes appear to be starting the new week in a firmer mood after strong gains the previous week, as investors await the release of the minutes from the Federal Reserve’s latest meeting, as well as the expected Jackson. The Hole Symposium. The four-day Democratic National Convention also begins this week.

1. Meeting Jackson Hole in focus

The week’s key event will be the Federal Reserve’s annual economic symposium in , Wyoming starting Friday, with investors looking for more clues about the pace and timing of interest rate cuts in the coming months.

Markets just had their best week of the year on expectations of a very soft landing for the US economy as recent positive data eased concerns about the prospect of a recession.

Most market participants believe it will cut rates at its next meeting in September, with the main debate over the size of the cut – a quarter of a percentage point or half a point.

Fed chief Jerome Powell’s speech will be the highlight of the meeting, and markets are clearly pricing in a dovish outlook, especially after Fed members Mary Daly and Austan Goolsbee signaled the possibility of easing in September over the weekend.

The Fed has kept its benchmark overnight interest rate in the current range of 5.25%-5.50% since last July after raising its policy rate by 525 basis points from 2022.

2. Futures consolidate after the winning week

U.S. stock futures traded narrowly lower on Monday, consolidating after strong gains the previous week amid growing optimism about the underlying strength of the world’s largest economy.

By 04:05 ET (08:05 GMT), the contract was down 10 points, or 0.1 percent, down 3 points, or 0.1 percent, and down 28 points, or 0.2 percent.

Wall Street benchmarks are coming off a winning week, with the core gaining 3.9% for the best week since 2023. The tech product added 5.2% and the blue chip rose 2.9%.

Investors will focus this week on the Federal Reserve’s latest meeting on Wednesday ahead of Fed Chairman Jerome Powell’s Jackson Hole speech on Friday.

Earnings season continues this week with results on Monday from Palo Alto Networks (NASDAQ: ) and Estee Lauder (NYSE: ).

3. The Democratic National Convention is about to begin

Monday kicks off the four-day Democratic National Convention, with Vice President Kamala Harris set to formally accept the party’s nomination to run for president Thursday night in a highly anticipated speech.

President Joe Biden has abandoned his re-election bid after his poorly received debate against Republican nominee Donald Trump in late June prompted many in the party to call for him to withdraw.

Harris heads into the convention enjoying a significant swing in momentum, with opinion polls in her favor in some battleground states.

“Recent polls suggest Harris is better positioned in a head-to-head contest against Donald Trump,” UBS said, citing recent polls, after gaining more than 6 points in national polls, improving Biden’s position by a “similar margin in some cases. of critical swing states”.

“The shortened campaign likely helps Harris because it leaves less time for Republican critics of his policy positions to change perceptions,” UBS said, though it added that Harris still needs to show up and expand on his policies to win unemployed voters.

But this week’s Democratic National Convention “will give him an opportunity to do that, as will next month’s scheduled debate with Donald Trump,” he added.

4. Goldman downplays the likelihood of a US recession

Goldman Sachs cut the odds that the United States will enter a recession in the next 12 months to 20% from 25% following the release of recent healthy economic data.

Earlier this month, the brokerage raised the odds of a U.S. recession from 15 percent after the jobless rate rose to a three-year high in July, sparking recession fears.

“We have now reduced our probability from 25% to 20%, mainly because data for July and early August released since August 2 show no sign of a recession,” Goldman Sachs chief economist Jan said on Saturday Hatzius, in a note.

Thursday’s jobless claims report showed the number of Americans filing for jobless benefits fell to a one-month low in the previous week, while separate data showed on the day that retail sales rose the most much in 1-1/2 years in July.

Hatzius said if the August jobs report, due in early September, looks “reasonably good,” he would cut the likelihood of a U.S. recession to 15 percent.

He says the Federal Reserve will cut interest rates by 25 basis points at its September meeting, but has not ruled out a 50 basis point cut if the jobs report misses expectations.

5. Raw slippage as Gaza cease-fire talks continue

Crude oil prices fell on Monday on concerns about falling demand in top oil importer China, as Middle East ceasefire talks remained in focus.

By 04:05 ET, WTI futures were down 0.9% at $74.83 a barrel, while the contract was down 0.9% at $78.98 a barrel.

Both benchmarks fell nearly 2 percent late last week after data from China showed its economy lost steam in July, with new home prices falling at the fastest pace in nine years and industrial production slowing and rising unemployment.

Attention now turns to ceasefire talks in Gaza, which are set to continue this week in Cairo after a two-day meeting in Doha last week.

US Secretary of State Antony Blinken on Monday called Washington’s latest diplomatic attempt to reach a cease-fire deal in Gaza “probably the best, maybe the last opportunity” and urged all sides to push the deal across the line. arrival.

There has been increased urgency to reach a ceasefire deal amid fears of escalation across the region, an escalation that could affect supplies from the oil-rich region.